A Counterfeiter's Paradise (16 page)

If the travelers really did apprise Forsyth of the enemy’s movements,
their efforts didn’t help much. Early in the morning of February 22, five hundred troops assembled on the Canadian shore, marched across the river’s slippery surface, and after a fierce fight, captured Ogdensburg. Forsyth and his men fled to the woods, where he composed an angry dispatch to his superiors demanding reinforcements while the British set fire to his barracks. Of course, the point of Noble’s story wasn’t who won but his courageous act of patriotism: would a British spy risk his life aiding the Americans? Perhaps this persuaded the justices to drop their already tottering case; whatever they thought of Noble’s tale, nothing else appears in the record after his second day of testimony.

Noble and Lewis couldn’t admit the real reason for their trip. It wouldn’t have comforted the justices to know that the men they suspected of treason had come to Pennsylvania to take part in a time-honored American tradition as deeply rooted as churchgoing or slavery. Noble and Lewis returned from Canada to forge money just as the nation’s mushrooming financial sector began to look more and more like a massive counterfeiting enterprise. In the banking boom that began at the turn of the century and surged after the fall of the Bank of the United States, the bankers who printed notes and the criminals who forged them gradually became more or less indistinguishable. While their intentions differed, their product was often the same. Whether genuine or fake, the bills pretended to be something they weren’t: placeholders—“hostages,” in Thomas Paine’s words—for precious metals.

The war with the British marked the turning point that pushed America’s fragile finances over the edge. While Noble and Lewis tramped through the snow on their trek to the States, carts full of silver and gold spun their wooden wheels in the other direction, smuggled across the border by New England merchants trading with the British. This flourish-ing black market drained the nation’s already strained supply of coined money, or specie; one contemporary estimated that $2 million worth of gold left the United States in early 1814 alone. The dwindling coin
reserves only ratcheted up demand for credit, and Pennsylvania, where the shortage was acutely felt, responded dramatically. In March 1814, about a year after Noble and Lewis arrived in Bellefonte, the state legislature passed a bill chartering forty-one new banks in addition to the six that existed—an increase of almost 600 percent.

Horrified at the prospect of Pennsylvania being swamped with inflationary paper, Governor Simon Snyder vetoed the measure. He told the legislators that while “Eastern mercantile cupidity” had lost “immense sums of specie” doing business with the British, more banks would only make things worse. “Is there at this time an intelligent man in Pennsylvania,” he wrote, “who believes that a bank-note of any description is the representative of specie?” The answer was yes, at least enough in the legislature to override Snyder’s veto. While an extreme case, Pennsylvania wasn’t alone. As Canada steadily siphoned off America’s precious metals, states chartered more banks and the amount of paper money grew precipitously. From 1811 to 1815, the face value of notes in circulation almost doubled, rising from $66 million to $115 million.

Skyrocketing quantities of notes combined with shrinking stores of specie made a crisis inevitable. It came in August 1814, when the British invaded the Chesapeake and marched on Washington, DC. Under orders to retaliate for American rampages in Canada, the British officers staged a spectacle calculated to crush the enemy’s spirit. They burned down the city’s government buildings, including the White House, which blazed all night, leaving nothing but a smoldering shell. The psychological impact of torching the nation’s capital was predictably severe, not only among American soldiers but also in the financial sector, which in its over-extended state relied precariously on people’s confidence. The razing of Washington destroyed that faith, setting off a panic that triggered a run on Chesapeake banks. In response, the banks suspended specie payments.

The freeze eventually spread throughout the country, until institutions everywhere stopped redeeming their notes for coin—everywhere but New
England, where reserves were greater and banks better regulated. While ostensibly a crisis, the affair must have come as a relief to bankers, who no longer had to sustain the expensive illusion that their notes represented silver and gold. Business continued as usual: although banknotes lost value, they continued to pass as money. Paine’s hostages, after years of straining at their fetters, had finally been set free.

The federal government suffered the most. To fund the war, it levied duties on foreign trade and went deeply into debt by issuing bonds and printing Treasury notes. Since the Treasury accepted bank paper in payment of taxes and loans, it ended up losing a lot of money on the depreciated notes when banks stopped paying out coin in August. With escalating costs, deficient revenue, and no stable currency with which to pay its obligations, the Treasury hit rock bottom: it couldn’t repay the interest on its debts, and by the end of the year, its notes had become worthless. Almost three decades since the delegates met in Philadelphia and vowed to prevent America’s checkered financial past from repeating itself, the government was broke and the country awash with cheap paper. With no national bank to force the banks to resume payments, Americans found themselves in a purely faith-based economy. Moneymaking, once the exclusive province of disgruntled silversmiths and enterprising crooks, had gone mainstream.

ANYONE WHO GLIMPSED
the four men scrambling uphill through the foliage could be forgiven for thinking they were homesteaders headed west. It was the fall of 1815, and the taverns overflowed with people who had waited until harvesttime to start their journey. The men traveled by wagon like pioneers; their cart might have carried food, bedding, and a closely kept bundle of cash to buy a plot of land wherever it was cheap enough. They ascended what locals called the Allegany range, a high ridge of the Alleghenies west of Bedford, the last major chain on the road to
Pittsburgh and the frontier beyond. The temperature cooled the higher they climbed, and the landscape grew more striking in scale, so that when the thick forests parted, the travelers caught dazzling views of blue mountains in the distance and green valleys sprawling below.

The scenery was familiar to Lewis, who walked alongside Noble and two cronies the counterfeiters had recruited, Rufus Crosby and James Smith. They were hiking to a camp in the wilderness, guiding a wagon weighed down by two locked trunks, each about three feet long. The travelers didn’t unload their cargo until they reached the clearing where they had built their makeshift home. Around them lay all the necessities of frontier life: an ax, a butcher knife, a skillet, a canteen, a coffeepot, and various flasks of liquor. A nearby stream supplied the site with fresh water. Their hut consisted of a frame of saplings covered with a mat of branches and leaves. The roof wasn’t sturdy enough to withstand the rain, and unfortunately, it rained often.

If the walls started leaking, they would travel to a tavern three miles away to find drier lodging. Its proprietor, Michael Miller, saw them frequently. When the men first appeared on the mountain in early September 1815, they told him they were a team of land surveyors planning to divide up an unsettled tract of twenty thousand acres into four-hundred-acre lots. Even Miller, whose profession exposed him to some odd characters, must have found the group a little strange. As always, Lewis cut the most attractive figure: polite, sociable, finely attired. James Smith was younger and shorter, with dark hair; Rufus Crosby could often be seen with a fiddle on his shoulder, which he played very well. Noble brought up the rear. He obviously ran the operation: the others called him “captain” and carried out his orders. He didn’t endear himself to Miller, however—“a fat chunk of a man” was how the tavern keeper later described him. It didn’t help that Noble spoke with a northern accent that immediately marked him as an outsider.

Miller might have had his doubts, but he had no solid grounds for
suspecting anything illegal. All he saw them bring to the camp were provisions like beef, fish, and flour; the two mysterious trunks, when he peeked inside, contained nothing but bedclothes. But if he never caught sight of any counterfeiting tools, he didn’t notice any surveying instruments either. There was something else that seemed curious. The men gave him a quart-size jug filled almost to the brim with ink, perhaps as a form of payment, or a token of their gratitude. The jug was so big that five months later, the tavern keeper still used it to write.

Producing counterfeits required ink, paper, plates, and a printing press. First Lewis and the others would ink the plate, place it in the press, and run paper through the contraption to produce sheets of fresh bills. When the sheets had dried, they could be cut into individual notes. Then the signatures of the bank’s cashier and president would be forged on each bill, a process called “filling up” the notes. The final product didn’t resemble the colonial money Sullivan had counterfeited decades earlier: the banknotes were wider, printed horizontally rather than vertically, and more visually sophisticated. They carried vignettes and various other design flourishes to dissuade counterfeiters, which made Noble’s engraving task that much more difficult.

It had been more than two years since Bellefonte’s citizens had accused Noble of espionage, and he had since learned to be more careful. A remote backcountry camp provided an excellent place to work, far from the prying eyes of local townsfolk. The counterfeiters kept everything secret. The container of ink given to Miller offered the only clue of their intentions; the tavern keeper never spotted any paper, plates, or a printing press. Aside from the inclement weather, the job went smoothly. They stayed for three weeks making fake bills before they packed up their wagon and took off, leaving no trace of their crime—just their butcher knife and hut remained.

Lewis and his collaborators were smart to take extra precautions. As they learned at Bellefonte, Noble inevitably aroused suspicion, and not even Lewis at his most appealing could entirely distract people from the
pudgy engraver’s eccentricities. But Noble’s engraving expertise made him too valuable to lose, despite the risks his presence posed. Noble wasn’t Lewis’s only problem: circumstances had also made Pennsylvanians more vigilant. As the quantity of banknotes soared with the new bank charters in March 1814 and similar expansions in other states, so did the opportunities for moneymaking. Criminals could now do more than just forge an existing note. They could also defraud people with spurious, raised, and altered bills. Spurious money displayed the name of a real bank but used a different design: the passer counted on his victim’s recognizing the bank without knowing what its notes looked like. Raised bills took genuine currency and made it more valuable by changing the denomination, and altered notes were printed from the plates of a bank that had gone bankrupt.

These creative swindles would not have been possible without America’s growing financial complexity. In Owen Sullivan’s era people only traded in a few currencies: their colony’s and those of neighboring provinces. In David Lewis’s day, by contrast, there were too many kinds of paper changing hands for the average American to be familiar with all of it. Detecting a bad bill required knowing the notes of hundreds of different banks, a daunting task for anyone, much less an ordinary shopkeeper. Newspapers did their part by publicizing known counterfeits and new publications, called “banknote reporters,” gave readers detailed catalogs of fake money in circulation. But the banking world’s vastness ensured that people’s knowledge of it would always be incomplete, and even the slightest gap gave counterfeiters an opening.

The dizzying diversity of American currency didn’t just make identifying fakes more difficult. It also created a headache for those honest citizens trying to exchange genuine money, as the relative values of different bills fluctuated constantly. A banknote’s worth wasn’t just indicated by the denomination printed on its surface; the more important factors were the reputation of the bank that issued it and the location of the person
spending it. Generally, a bill cost more the closer you were to the institution where it originated, although some banks, namely, the more respected ones in eastern cities, preserved the value of their notes even at great distances. In Baltimore in 1818, for instance, notes from Boston, New York, and Philadelphia—called “eastern paper” or “city paper”—all passed at par. “Western paper,” on the other hand—bills printed by banks in Bellefonte, Bedford, and Pittsburgh—was discounted, or “shaved,” by 3 to 5 percent. Newspapers and banknote reporters kept people updated on the prices of different currencies, and the statistics published in their pages naturally encouraged speculation. A canny businessman could buy up western paper cheaply in Baltimore and make a profit when he arrived in Pittsburgh, where the same notes traded at a higher price. It may not have been counterfeiting, but it wasn’t exactly honest either.

All of this meant that in the fall and winter of 1815, when Lewis started passing the notes that he and Noble forged at their campsite in September, he had to work harder than his colonial predecessors. Lewis carried counterfeits from three institutions: the Philadelphia Bank; the Baltimore-based Union Bank of Maryland; and the Hagerstown Bank, located in Maryland about six miles south of the Pennsylvania border. Not only did he need to muster every ounce of personal charm to cajole leery locals into believing his money was authentic, he also had to deal with varying values for different bills. Fortunately, he no longer had to worry about how people would respond to Noble, since after their September printing spree, the two drifted apart. The engraver likely returned to Canada, while Lewis stayed in Pennsylvania to make his fortune in his native state.

After splitting with Noble, Lewis flitted from one village to the next, trying to change his bogus cash for genuine money at stores and taverns along the way. He used a couple of aliases—David Philips and David Wilson—and avoided anywhere he might be recognized. If someone had plotted his route on a map of Pennsylvania, it would have cut across counties shaped like jigsaw pieces, divided by rivers or mountain ranges,
sprinkled with hamlets separated by miles of jagged Allegheny terrain. From the tilled lowlands of Franklin County to the forested ridges of Mifflin County to the slate cliffs of Bedford County, Lewis spent the final few months of 1815 traversing a region almost as varied as the currency flowing through it.